ASSIGNMENT 1 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 4: Leadership and Management (5036)

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1 Table of Contents
1. Introduction ......................................................................................................................................................1
2. Theories of leadership ......................................................................................................................................2
2.1 Traits approach .................................................................................................................................................3
2.2 Functional approach .........................................................................................................................................4
3. Theories of management..................................................................................................................................5
3.1 Fayol's administrative management theory .....................................................................................................6
3.2 Peter Drucker's Theory of Management ..........................................................................................................7
4. Leadership and management styles ................................................................................................................8
4.1 Autocratic style .................................................................................................................................................9
4.2 Democratic style .............................................................................................................................................10
4.3 Laissez-faire style ............................................................................................................................................11
5. The factors that influence the development of the culture in organisations ................................................12
6. Conclusion ......................................................................................................................................................13
7. References .....................................................................................................................................................14

1. Introduction

This is the blog for a report on basic management and leadership knowledge as a company Director. This
blog is split into four sections: The first section delves deeper into the various leadership theories in
relation to management activities in various organizations, including the definition of the Traits approach,
Functional approach, Contingency theories of leadership, Transformational and transactional leadership,
Inspirational leadership, and Servent leadership. The second section investigates various management
theories, such as Fayol's administrative management theory, Peter Drucker's Theory of Management,
Mintzberg's theory of management roles, Douglas McGregor's Theory X and Theory Y management,
Blake and Mouton's Managerial Grid, and Likert's Management System. The third part evaluates and
provides instances of various leadership and management styles and their application in various business
scenarios in various firms. The final part discusses the elements that impact the establishment of
organizational culture.
 2. Theories of leadership
2.1 Traits approach
Definition:

Gordon Allport's trait theory assumes that each individual has a unique psychological structure and that
certain traits contribute to successful leadership. In other words, great leaders are born not made. Several
other theories were developed over the years, including the Myers–Briggs Type Indicator, the Big Five
model and Hans Eysenck's three-factor model. The Big Five, for instance, states that human personality is
defined by five personality traits, such as conscientiousness and extroversion (Andra Picincu, 2019)

Application:

The trait approach is a way of studying personality that places emphasis on the traits of an individual as
markers of personality. Traits are continuing patterns of behavior and thoughts that are generally stable
over time. Traits are often the things that people use to describe another person such as nice, rude, funny,
and honest. The trait approach suggests that our personalities are comprised of these different behavioral
traits.

The trait approach is focused on individual differences and the interaction and combination of personality
traits are what makes individual personalities unique. Many different theories use this approach such as
the Big Five personality factor theory and the work of Gordon Allport and Raymond Cattell. A critique of
the trait approach for personality is that traits can sometimes be bad predictors of behavior. Just because a
person scores high on a particular trait doesn't mean they will act that way in a real-world setting.

Strength:

Trait Theory adds to leadership knowledge in three valuable ways. According to Northouse (2013), these
are the strengths of Trait Theory:

•
It builds on the premise that leaders are distinctive.
•
Unlike all other leadership theories, Trait Theory boasts a century of research to confirm the
approach.
• Trait Theory provides benchmarks for what to look for in leaders and if we want to be leaders (pp.
29-31).
Weakness:

There are also four flaws of Trait Theory. While being one of the earliest leadership theories, there are
still fundamental issues with the theory explained below:

• It’s leader-centric, and only focuses on the leader not the follower or the situation.
• Some findings are ambiguous and subjective leading to uncertainty in the validity of the approach.
• Much of the Trait Theory research fails to look at how specific traits influence leadership outcomes
such as performance, productivity, and employee satisfaction
• Since traits are innate, it becomes unusual for training and development purposes (Northouse, 2013,
pp. 30-32).

2.2 Functional approach

Definition:

“Functionalism is a theoretical perspective that focuses on the functions performed in society by social
structures such as institutions, hierarchies, and norms. Within this theory, function refers to the extent to
which a given activity promotes or interferes with the maintenance of a system. Functionalism emerged in
the early 20th century and is associated with authors such as Émile Durkheim, Talcott Parsons, Herbert
Spencer, and Robert Merton, who dominated American social theory in the 1950s and 1960s. This entry
focuses on the application of functionalist theory to the study of mass communication. After introducing
the most relevant scholars and the concepts they proposed within this approach, the entry discusses the
relationship between the theory and changes in the ways media are used, prompted mainly by the
widespread use of the Internet.” ((PDF) Functionalist theory, 2022)

Application:

Source: https://nehatd.files.wordpress.com/2010/04/leader2.png?w=500?w=258

“John Adair’s Action-Centered Leadership”: One of the most popular and influential theories about
functional

leadership is John Adairs Action Centered Leadership. The model is composed of three overlapping
circles. Each of the three circles represents a different area of leadership functions. (Action-Centred
Leadership - John Adair, 2022).
Task: The task or challenge at hand must be carried out by the group, and cannot be completed by one
person.

Team: The team can only achieve outstanding results if all individuals within that team are sufficiently
developed.

Individual: The individuals are waiting for a motivating and challenging task to carry out. The model
looks into how the needs described above may be provided for. In most organisations, most employees’
needs are provided for by the manager, but in other organisations, individuals themselves take on a
leading role, even when they don’t have a formal position of leadership.

Advantages of Functional approach of Leadership:

As far as I’m concerned, advantages of this type of leadership encapsulated in three phrases:

• Specialization: grouping employees by specialization ensures a dependable level of departmental

competence. This ensures that support issues moved up to the follow-up group are handled by fully
qualified personnel, which increases customer satisfaction and retention.
• Operational Speed: Handle a support problem faster than someone with less experience.
• Operational Clarity: Eliminate duplication of assignments that waste time and effort and makes it
easier for management to direct work to appropriate employees. (Benefits & Disadvantages of a
Functional Organizational Structure, 2022).

Limitations of Functional approach of Leadership:

By contrast, this type also having a lot of limitations including:

• Segregation: Employees in different teams do not get the opportunity to meet and share
perspectives, which can be harmful for the progress of the business in the long run.
• Weakening of Common Bonds: When each group of specialists in a functional organization is
relatively isolated, the common bond that emphasizes a single overarching organizational purpose
is almost inevitably weaker than in an organization where different kinds of employees regularly
interact.
• Lack of Coordination: As communication becomes increasingly dominant in organizations,
isolated groups may underperform or even fail because they have no institutionally recognized
way of communicating needs and issues to other functional groups that might have helped.
• Territorial “Disputes”: These "disputes" may have to do with disagreements over goals, budgetary
competition or any number of issues that stem from a clash of egos that occur when each
department has its own separate functional structure or where a strong sense of a common purpose
is lacking. (Benefits & Disadvantages of a Functional Organizational Structure, 2022)

3. Theories of management
3.1 Fayol's administrative management theory
Henri Fayol, the author of the administrative theory, proposed that organizational management and the
role of human and behavioral aspects in management should receive more attention. This theory states that
there are 5 phases in typical management operations, including forecasting and planning, organizing,
commanding, co-ordinating, and controlling.

In addition, in Hery Fayol’s administrative management theory, we need to care 14 principles (Jason
Gordon, 2022)

• Division of Labor - The division of labor within an organization allows for specialization.
Individuals can become more proficient in the accomplishment of a limited set of activities - thus
improving their output.
• Authority - Managers must have the authority to issue commands, but with that authority comes
the responsibility to ensure that the work gets done.
• Discipline - There must be a clear line of authority. Subordinates must fully obey instructions from
superiors. Managers must have the ability to instill discipline through punishment.
• Unity of Command - There should be only one boss from whom a worker receives instructions?
• Unity of Direction - Each workgroup or department is working under a singular plan that
coordinates efforts. Work efforts should be guided by one supervisor.
• Subordination of Individual Interest - The interests of individuals are subordinate to the general
interests of the group or department or company.
• Remuneration - Compensation is used to incentivize worker performance. Remuneration can
include both financial and non-financial forms of compensation.
• Centralization - Decision making should be either centralized (management makes all decisions)
or decentralized (employees also make decisions) depending upon the characteristics of the
organization and worker competency.
• Line of Authority (Scalar Chain) - There must be a hierarchy of authority that places workers
below managers in the reporting structure. The degree of authority is higher at each stage of the
organizational hierarchy. The organizational hierarchy should be well understood throughout.
• Order - There must be well-defined rules and standards for the work environment and work
responsibilities. A safe and orderly environment leads to greater coordination.
• Equity - The organization must be run based upon principles of fairness. Employees should be
treated with a combination of kindliness and justice.
• Stability of Tenure - Organizations need low turnover. This allows employees time to learn their
jobs, develop skills, and acquire loyalty.
• Initiative - Managers must promote initiative by allowing employees to create plans and carry
them out.
• Esprit de Corps - Establishing a sense of belonging within the organization creates a sense of
unity and moral.
3.2 Peter Drucker's Theory of Management
Using his extensive experience as a consultant at the companies like IBM, General Motors, and Procter &
Gamble, Drucker wrote 1954’s The Practice of Management, where he presented a holistic approach to
operating an organization and introduced a discipline of business management – the first in business
history. He believed that a successful manager needs to understand subjects like psychology, science, and
religion, and be guided by ethical and moral principles.

Drucker encouraged creative rather than bureaucratic management and insisted that managers should,
above all else, be leaders. Rather than setting strict hours and discouraging innovation, he opted for a more
flexible, collaborative approach.

At the core of Drucker’s management theory lie the concepts of decentralization, knowledge work (in fact,
he coined the term “knowledge worker”), management by objectives (MBO), and the SMART goal
method.

• Decentralization means that managers should empower employees by delegating tasks.

• MBO involves superiors and their subordinates working together to set common goals, identify
employees’ areas of expertise and define measurable expected results.
• The SMART method means that those goals need to be specific, measurable, achievable, relevant,
time-specific and recorded.

4. Leadership and management styles

4.1 Autocratic style
Definition:

Autocratic leadership, also known as authoritarian leadership, is a leadership style characterized by

individual control over all decisions and little input from group members. Autocratic leaders typically
make choices based on their ideas and judgments and rarely accept advice from followers. Autocratic
leadership involves absolute, authoritarian control over a group (Nittsufarm, 2022)

Advantages

• Decision making is fast. With no consultation required the leader can make quick decisions.
• Improves performance in certain situations. Managers are motivated to perform due to a “leader is
watching” feeling.
• Less stress in certain circumstances. For managers and other subordinates, it can result in less
stress as the leader is shouldering all responsibility for outcomes.

Disadvantages

• Frustrating for subordinates. Communication is one way which can be frustrating for subordinates.
• Fear and resentment are common as people don’t like being bossed about and criticized more often
than praised.
• A paralyzed organization. The organization is paralyzed when the leader isn’t present, as the entire
organization is dependent on the leader for instructions.
 • New Opportunities Missed. Unless the leader keeps pace with new trends as time goes on, new
opportunities could be missed. Additionally, the lack of flexibility in autocratic leadership doesn’t
lend itself to planning for long-term initiatives.
• Communication Breakdown. Because directives flow downwards from the leader to the
subordinates, misunderstandings and confusion can arise because of the lack of feedback that is
allowed from subordinates.

When to use:

• When quick decisions are needed. Autocratic leadership works best in situations where quick
decisions are needed, such as turning around a failing organization.

• When close supervision is required. Autocratic leadership can work well when existing
management is too lenient and workers are not pulling their weight. The autocrat will issue
directives to be followed and the activities performed as a result of these directives will be closely
followed.

• When workflows need to be streamlined quickly. Autocratic leadership works well when things
just need to get done, and this style enables subordinates to get things done without worrying about
the bigger picture. This explains why autocratic leadership is very common in the military.

Example:

Many empire builders and leading figures throughout history have been autocratic leaders—including
Genghis Khan and Margaret Thatcher— however, we’ll provide two more recent examples of autocratic
leadership: Richard Nixon and Elon Musk.

While Nixon was a complex leader and person, many of his major presidential decisions were
characterized by his leadership style. Regarded as a foreign affairs expert, President Nixon often did not
trust the advice of others, regardless of their expertise, and relied on his own experience and desires to
make decisions, which were then conveyed to his staff and the U.S. military.

Elon Musk exemplifies the creative side of autocratic leadership. While Musk’s business ventures have
been driven by his unique vision, Musk takes very little input and often makes impulse decisions that
haven’t been vetted by team members. For example, Musk’s infamous 2018 tweet in which he announced
he’d be taking Tesla private got Musk in still-unresolved trouble with the SEC.

4.2 Democratic style

Definition:
Democratic leadership (often called participative leadership) is focused on the leader’s team and is
characterized by decision making being shared across the team. In stark contrast to the autocratic
leadership style, ideas are shared freely and open discussion is encouraged.

Although discussion is encouraged it is the role of the leader to guide and direct these discussions, and
ultimately make a decision as to which way to proceed. Democratic leaders expect their subordinates to
have in-depth valuable experience and to be self-confident (Nittsufarm, 2022).

Advantages

• Decreased risk of catastrophic failure. As decisions are made with the involvement of the entire
group, it provides a group check resulting in it being less likely for the leader to make a disastrous
decision.

• Good working environment. Subordinates at all levels can feel engaged and take on the
responsibility to challenge themselves because they are involved in decision making, and it is this
sense of engagement that can lead to the creation of a good working environment and increased
job satisfaction.

• High-performance teams. Subordinates are encouraged to solve problems under their own
initiative, which in turn can create a higher-performing team. This higher performance, in turn,
leads to greater productivity.

Disadvantages

• Slow decision making. By involving subordinates in decision making you can dramatically slow
down decision making. This can be a real problem in situations where the organization needs to be
turned around urgently, or where maintaining the first-mover advantage is necessary.

• Over-dependence on the team. A danger of the democratic leadership style is that the leader can
become overly dependent on the group or hidden within the group, allowing the group to make the
decisions. This can result in decisions being made which drift the organization towards its strategic
goal rather than rapidly and purposely moving towards its goal.

• Collaboration burden. Leaders can become overly burdened with the overhead of ensuring experts
meet and collaborate that they take their focus off key metrics and the urgent need to move
towards the strategic vision.

When to use:

• When subordinates are experts. Democratic leadership styles work well when working with subject
domain experts, for example, technology experts or pharmaceutical experts.
 • When subordinates are professionals. For an experienced and professional team, a democratic
leadership style can bring out the best in them, by building on their existing strengths and talents
rather than just expecting them to perform.

• When it’s necessary to create ownership. By involving the team in decision making and planning,
you implicitly create buy-in to both the decision and the plan. This makes team members much
more committed to the plan, and much more likely to overcome or work around barriers to
execution as they arise.

Example:

Steve Jobs,Co-founder of Apple

Steve Jobs displayed at least two leadership styles when he led Apple. He began as an autocratic leader
while he was building the company from the ground up. However, he was ousted from the company in
1985. The company began to decline, and he was asked to return in 1997. A more democratic approach
became customary for him during this second phase of leadership, although he still had autocratic
tendencies. Jobs understood how to adapt his leadership style to suit the needs of the company at various
stages of growth.

4.3 Laissez-faire style

Definition:

Laissez-faire leadership is where the leader doesn’t actually lead the team but instead allows the team to
entirely self-direct. This style of leadership is also known as the “hands-off” style, and in contrast to the
other leadership styles we’ve looked at all authority is given to subordinates including goal setting,
problem-solving, and decision-making. From the leader’s perspective, the key to success is to build a
really strong team and then stay out of their way (Nittsufarm, 2022).

Advantages

• Creates personal responsibility. Laissez-faire leadership styles challenge subordinates to take

personal responsibility for their work and the outcomes of their work.

• Supports fast course corrections. Motivated people working autonomously are typically able to
overcome roadblocks and adjust course far more quickly than when they need to seek approval.

• Supports higher retention. When successful it can result in higher retention as motivated
professionals and experts thrive in their work environment which supports autonomous decision
making.

Disadvantages

• Lack of accountability. There is nobody accountable to take the credit in cases of success, or to
take the blame in cases of failure.
 • Higher stress levels. Subordinates can suffer from high levels of stress if they feel unsupported by
their leader or unsure of their capabilities.

• Missed deadlines. Self-organizing teams without oversight or direction are prone to miss
deadlines.

When to Use

• When you’re working with creative experts. Use with creative professionals who have solid skills
and lots of experience in their jobs.

• When people are proven. When your team has a proven track record of high performance and
achievement on certain types of project.

• When your team is driven. When your team is motivated and driven to succeed on their own and
are comfortable working without supervision.

Example:

Hoover was a part of America's Presidential Cabinet, in which he served as the secretary of commerce for
two American Presidents before he became a President himself. He followed the hands-off approach
during his Presidency. He chose his employees by not having any office experience and only being experts
in engineering. He did trust on his team members as he chose the experienced employees by himself,
which was one of the qualities of a laissez-faire leadership.

5. The factors that influence the development of the culture in organisations

Definition of Organisational Cultural:

Organizational culture is the collection of beliefs, values and methods of interaction that create the
environment of an organization. The organizational culture encompasses the foundational values of a
company or business. It also reflects an organization’s expectations and philosophy and the experiences of
the employees and leaders within it, often determining the group’s future direction (Indeed Editorial
Team, 2022).

Three levels of Organizational Culture:

Level 1: Artefacts

• Artefacts and creations – the constructed physical and social environment.

• Includes physical space and layout, the technological output, written and spoken language and the
overt behaviour of group members

Level 2: Espoused beliefs and values

• Solutions about how to deal with a new task, issue or problem are based on convictions of reality.
 • If the solution works, the value can transform into a belief.
• Values and beliefs become part of the conceptual process by which group members justify actions
and behaviour.

Level 3: Basic underlying assumptions

• When a solution to a problem works repeatedly, it comes to be taken for granted.

• Basic assumptions are unconsciously held learned responses.
• They are implicit assumptions that actually guide behaviour and determine how group members
perceive, think and feel about things.

Influences on the development of culture

• History: The reason, and manner in which, the organization was originally formed, its age, and the
philosophy and values of its owners and first senior managers will affect culture. A key event in
the organizations history such as a merger or major reorganization, or a new generation of top
management, may bring about a change in culture. Corporate history can be an effective induction
tool to assist a growth programme, and to help integrate acquisitions and new employees by
infusion with the organizations culture and identity.
• Primary function and technology: The nature of the organization’s business' and its primary
function have an important influence on its culture. This includes the range and quality of products
and services provided the importance of reputation and the type of customers. The primary
function of the organization will determine the nature of the technological processes and methods
of undertaking work, which in turn also affect structure and culture.
• Goals and objectives: Although a business organization may pursue profitability, this is not by
itself very clear or a sufficient criterion for its effective management. For example, to what extent
is emphasis placed on long-term survival or growth and development? How much attention is
given to avoiding risks and uncertainties? Or how much concern is shown for broader social
responsibilities? The organization must give attention to objectives in all key areas of its
operations. The combination of objectives and resultant strategies will influence culture, and may
itself be influenced by changes in culture. 28 C Cloudy
• Size: Usually larger organizations have more formalized structures and cultures. Increased size is
likely to result in separate departments and possibly split-site operations. This may cause
difficulties in communication and inter-departmental rivalries with the need for effective co-
ordination. A rapid expansion, or decline, in size and rate of growth, and resultant changes in
staffing will influence structure and culture.
• Location: Geographical location and the physical characteristics can have a major influence on
culture - for example, whether for development.
• Management and staffing: Top executives can have considerable influence on the nature of
corporate culture. However, all: an organization is located in a quiet rural location or a busy city
center. This can influence the types of customers and the staff employed it can also affect the
 nature of services provided, the sense of "boundary and distinctive identity, and opportunities
members of staff help to shape the dominant culture of an organization, irrespective of what senior
management feel it should be Culture is also determined by the nature of staff employed and the
extent to which they accept management philosophy and policies or pay only lip service. Another
important influence is the match between corporate culture and employees perception of the
psychological contract
• The environment: In order to be effective, the organization must be responsive to external
environmental influences For example, if the organization operates within a dynamic environment
it requires a structure and culture that are sensitive and readily adaptable to changes. An organic
structure is more likely to respond effectively to new opportunity and challenges, and risks and
limitations presented by the external environment.

6. References

Andra Picincu, 2019. What Is Trait Approach? [online] bizfluent. Available at: What Is Trait Approach?
(bizfluent.com)

Northouse, P. G. (2013). Leadership: Theory and practice. Thousand Oaks, CA: Sage

TechnoFunc. Trait Theories – Application [online]. Available at: TechnoFunc - Trait Theories -
Application

Small Business - Chron.com. 2022. Benefits & Disadvantages of a Functional Organizational Structure.
[online] .Available at: https://smallbusiness.chron.com/benefits-disadvantages-functional-organizational-
structure-11944.htm

Jason Gordon, 2022. What is the Administrative Theory of Management? [online] The Business
Professor. Available at: Administrative Theory of Management - Explained - The Business Professor,
LLC

Nadia Reckmann, 2022. 4 Ways to Implement Peter Drucker’s Theory of Management [online] Business
News Daily. Available at: What Is Peter Drucker's Management Theory? (businessnewsdaily.com)

Nittsufarm, 2022. Important Leadership Styles - And When to Use Them (2022) [online]. Available at:
Important Leadership Styles - And When to Use Them (2022) (ngontinh24.com)
Indeed Editorial Team, 2022. What Is Organizational Culture? [online] Indeed. Available at: What Is
Organizational Culture? | Indeed.com

Businessballs, 2022. Action-Centered Leadership - John Adair. [online] Available at:

https://www.businessballs.com/leadership-models/action-centred-leadership-john-adair/

Indeed Editorial Team, 2022. 8 Reasons Why Organizational Culture is Important [online] Indeed.
Available at: 8 Reasons Why Organizational Culture is Important | Indeed.com

KNEC notes and Past Papers, 2020. Influences on the development of culture [online] KNEC notes.
Available at: https://knecnotes.com/influences-on-the-development-of-culture/